📅 Market Report.
📉 The UK’s preliminary flash composite PMI fell to a 11-month low of 51.7 in October from 52.6 in September, holding just above the 50 no-change mark. The services PMI dropped to a 11-month low of 51.8 while manufacturing slid to a 6-month low of 50.3, hit by a sharp fall in foreign goods orders. Uncertainty ahead of next week’s budget, US elections abroad and geopolitical tensions added to firms’ weakened confidence. Employment contracted for the first time since December led by the steepest service sector job cuts in 13 months. Input price inflation eased further to a 4-year low of 57.8, opening room for the BoE to take a more aggressive stance if the slowdown persists. All eyes are on Finance Minister Rachel Reeves’ budget next Wednesday for clues on taxes, spending and fiscal policy.
🇪🇺 The preliminary eurozone composite PMI for October nudged up to 49.7 from 49.6 the previous month but remained below 50, indicating stalled business activity and ongoing contraction. Both manufacturing and services PMIs came in below 50, with manufacturing showing a less steep decline but services growth slipping further. Inflation pressures eased further with only marginal price increases in services despite firms’ costs rising. As we mentioned yesterday, the problem now is a price collapse due to a fall in economic activity. The data points to the eurozone economy barely avoiding contraction but still stuck in a downturn. Geopolitical risks, high energy costs and global trade slowdown continue hampering the recovery.
🇩🇪 The flash German composite PMI rose to 48.4 in October from 47.5 in September, beating forecasts and indicating a smaller contraction in business activity. While the reading remains below 50, signalling continued decline, the start to Q4 is better than expected. Germany’s economy contracted 0.1% in Q2 and the government expects a 0.2% decline for 2023 as a whole. Q3 GDP data is due next week. The flash PMI figures signal some stabilization in the German economy but ongoing weakness, particularly in industry, with risks still tilted to the downside.
🇯🇵 Japan’s factory activity contracted for the 4th straight month in October as demand and orders remained subdued. The flash manufacturing PMI fell further to 49.0 from 49.7, staying below the 50 no-change mark. Output also contracted in manufacturing for the second month running in October. Services activity slipped into contraction for the first time in 4 months, at the lowest since February 2022 on weak domestic and foreign demand (possible chinese slowdown). Overall business confidence softened to the weakest since August 2020 due to economic weakness at home and abroad and high costs. The composite PMI dropped into contraction for the first time in 4 months. The IMF projected slower Japanese growth of 0.3% this year versus 1.7% in 2023.
🇰🇷 South Korea’s economy barely grew 0.1% in Q3, weaker than expectations and the central bank’s forecast, due to declining exports. The finance minister called for response measures to address the slowdown in growth momentum. The central bank warned its 2024 growth forecast may be downgraded and achieving the current 2.4% target will be difficult. A rate cut in November or early 2025 cannot be ruled out given the external drag and weaker data. Annual growth also slowed more than expected to 1.5% in Q3, the weakest since Q3 2023, highlighting external risks. Geopolitical tensions and a slowdown in major trading partners continue posing challenges for the trade-reliant economy.
⚡ Tesla’s stock surged 12% after the company’s third-quarter earnings exceeded Wall Street forecasts. Even while Tesla’s revenue for that time was up 8% year over year, it fell just short of forecasts. According to Elon Musk, CEO, “vehicle growth” would reach up to 30% in the upcoming year because to “lower cost vehicles” and the “advent of autonomy.” Musk’s latest public appearances had been disappointing for not specifying timelines and costs for his RoboCap project.
🍎 Apple CEO Tim Cook visited China for the second time this year, meeting officials and partners to discuss AI, 5G, and Apple’s development in the country. The rollout of Apple Intelligence in China is a major focus, with Cook pledging to bring the AI feature to Chinese consumers as soon as regulatory approval is obtained. Apple faces increased competition in China from local players introducing new OS and devices, as well as a resurgent Huawei launching competing 5G phones and an upcoming VR headset. While iPhone 16 sales were up 20% on launch, overall iPhone sales fell 2% in China amid declining market share for Apple against domestic alternatives. The lack of Apple Intelligence in China could weaken motivation for users to upgrade phones given competing offerings with integrated AI. Approval timelines are uncertain but critical for Apple to roll out the feature as a differentiator in China, its largest market globally. The shares fail to break through the $240 barrier. We will see in the next few days.
Market View:
📊 Equities are trading in positive territory, but have yet to recover last week’s levels lost at the beginning of this week. The Mini SP500 futures is trading at 5865 points, below the 5900 point barrier. The Nasdaq 100 continues to trade in the vicinity of 20,300 points, currently trading at 20,780 points.
💵 The index has broken through the 104.50 point arc in recent hours and is now down to 104.20 points. The euro’s weakness, coupled with good US economic data, is strengthening the dollar. The EURUSD approached 1.0760 yesterday, bounced higher and is now trading slightly below 1.08. US 2-year and 10-year bonds continue to trade above 4% yields.
🇪🇺 In Europe, stock markets are trading in positive territory, trying to recover some of their losses. The CAC 40 is up almost 1% to over 19,500 points. The Eurostoxx 50 is close to 5,000 points, trading at 4,960 points.
🛢️ In crude oil, Brent crude is above $75 a barrel. Gold is holding its ground and is currently trading at $2,750. Bitcoin is not giving up either and is back up to $67,150.
Geopolitics:
🗳️ Decentralised blockchain platform for betting on future events Polymarket continues to show what looks like an imminent Trump victory over Harris. Biden two days ago said during a campaign event in New Hampshire: ‘We gotta lock him up….politically’.
🍔 McDonald’s fell 9% on the stock market after the E coli infection scandal in quarter pounders. The event comes suspiciously on the heels of Trump’s visit to McDonalds going viral, fuelling the perception that administrations are targeting any corporation or artist who shows support for Trump.
📰 Synchronised headlines are launched by the mainstream media calling Trump a fascist or associating him with the figure of Hitler. The media’s desperation for a Trump victory seems to be driving increasingly aggressive headlines. Recall that he has suffered two assassination attempts by individuals highly influenced by this rhetoric.
🤝 China and India announce an agreement to prevent new border tensions and strengthen political ties during the BRICS summit.
🌏 According to World Bank data, the BRICS account for 36.8% of the world’s GDP, a figure of 68 trillion dollars, surpassing the G7.
